This Zacks #2 Rank (“Buy”) looks to continue its earnings momentum thanks to the favorable building industry trends, strong architectural backlog and healthy performance of its framing glass and acrylic business.

On June 20, Apogee posted first-quarter fiscal 2013 earnings of 6 cents per share, compared with a loss of 8 cents a year ago. The results trumped the Zacks Consensus Estimate of 3 cents, marking the sixth positive surprise over the trailing seven quarters.

Revenues nudged up 1% year over year to $154.1 million. Growth in the Large-Scale Optical Technologies segment was somewhat offset by a flat performance in the core Architectural unit. Gross margin improved to 20.2% from 15.4% a year ago.

Apogee beefed up its earnings guidance for fiscal 2013 to between 48 cents and 58 cents per share from the earlier view of 40 cents to 50 cents. The company expects revenue growth in the mid single-digits, driven by its strategy of expanding its geographical footprint across the installation and storefront businesses.

Estimates Going Up

For fiscal 2013, all three estimates have been revised higher in the last 30 days, pushing the Zacks Consensus Estimate upward by 12% to 56 cents a share. This indicates an estimated annualized growth of roughly 154.6%. One estimate out of three has moved higher for fiscal 2014 over the same period. The Zacks Consensus Estimate for fiscal 2014 rose 3.9% to 79 cents per share, representing an estimated year-over-year growth of roughly 41.7%.

Stretched Valuation

Apogee’s valuation looks expensive on a P/E basis. Its trailing twelve months P/E of 46.58x is well above the peer group average of 7.28x. Moreover, the stock it currently trading at a forward P/E of 29.95x, more than four times the peer group average of 6.98x. The price-to-book of 1.48x is, however, on par with the peer group average. While investors can get skittish at this valuation, the strong earnings trajectory should lend support. Continued...